Testing for Earnings Management in the U.S. Amid the COVID-19 Pandemic

doi:10.33423/jabe.v23i5.4559

Cited by 6 publications

(2 citation statements)

References 17 publications

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“…Their results align with the perspective that the firms' disclosure timing strategy is influenced by capital-market pressure, political favour and lender concessions. Financial reporting quality related to COVID-19 is tested by Jordan et al (2021), which looks into two types of earnings management in the U.S. setting: financial crisis period (da Silva, 2019;Filip & Raffournier, 2014) by focusing on the global economic shock caused by the COVID-19 pandemic; second, we add to the evidence on financial reporting quality in the COVID-19 period as we employed observations from 29 countries, to add to those single-country setting of the prior studies (Šušak, 2020;Chen et al, 2021;Jordan et al, 2021); and third, our analysis compares pre and during-pandemic periods and employ the perspectives of earnings conservatism and value relevance as an attempt to provide a comprehensive view on corporate financial reporting behaviour due to the financial crisis period. Based on the discussions of the prior studies above, we predict that the COVID-19 pandemic will pose significant challenges impacting earnings quality.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

Financial Reporting Quality During COVID-19 Pandemic: International Evidence

Ismail,

Ariff,

Kamarudin

et al. 2023

AAMJAF

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This paper examines the effect of the COVID-19 pandemic on financial reporting quality proxied by earnings conservatism and value relevance of accounting information. Our final sample consists of 10,510 firm-year observations from 29 countries with a balanced number of 5,255 observations for pandemic and pre-pandemic periods. The results show that during the pandemic, the financial statements of companies with a financial year end of 31 March 2020 have different qualities than those in the pre-pandemic period. Lower earnings conservatism is demonstrated in the pandemic period compared to the pre-pandemic period, supporting the argument that business tends to slow the recognition of bad news as the pandemic starts. The value relevance of accounting information declined in the pandemic period, primarily affected by the reduced value relevance of the book value of equity. The findings of this study can help investors evaluate the quality of accounting information and make smarter investment decisions, especially when most companies are in financial trouble.

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Section: Hypotheses Developmentmentioning

confidence: 99%

Financial Reporting Quality During COVID-19 Pandemic: International Evidence

Ismail,

Ariff,

Kamarudin

et al. 2023

AAMJAF

View full text Add to dashboard Cite

show abstract

“…In addition, our study differs from previous studies in using both one-stage and two-stage regression models in EM estimations. Also, while previous studies [ 8 , 11 , [16] , [17] , [18] , [19] , [20] , [21] ] concentrate on a single-country level, this study presents the analysis at the multi-country level. Moreover, our study differs from prior research regarding the selected countries.…”

Section: Introductionmentioning

confidence: 99%

The effect of the COVID-19 pandemic on accrual-based earnings management: Evidence from four most affected European countries

Yaşar,

Yalçın

2024

Heliyon

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Real earnings management trends in the context of the COVID-19 pandemic: The case of non-financial listed companies in Vietnam

Tuan

Dung

Thao³

2023

Investment Management and Financial Innovations

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Real earnings management comprises the intervention by managers intending to change business strategies or policies to achieve specific goals. The paper aims to examine trends and levels of real earnings management in the context of the COVID-19 pandemic in Vietnam. The study uses time series data, and the sample includes 1,800 observations from 2016 to 2021. The methods of the study are regression analyses of the real earnings management model. The results indicate that the COVID-19 pandemic positively and significantly affected real earnings management of companies listed on the Vietnamese stock exchange. The trends and levels of real earnings management in the context of the COVID-19 pandemic increase depending on the severity of the pandemic. In terms of applications, the study provides evidence that the quality of financial reporting is lower during the pandemic. Listed enterprises in Vietnam are using high financial leverage, leading to a higher vulnerability to shocks such as the pandemic. Therefore, the real earnings management technique mainly used by managers is operating cash flow adjustment by using income maximization strategies to increase the ability to borrow capital to maintain business operations. The study suggests that the choice of income maximization or income minimization strategy depends mainly on commitments with the capital provider (credit institutions), specific contexts, and economic factors.

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Testing for Earnings Management in the U.S. Amid the COVID-19 Pandemic

Cited by 6 publications

References 17 publications

Financial Reporting Quality During COVID-19 Pandemic: International Evidence

Financial Reporting Quality During COVID-19 Pandemic: International Evidence

The effect of the COVID-19 pandemic on accrual-based earnings management: Evidence from four most affected European countries

Real earnings management trends in the context of the COVID-19 pandemic: The case of non-financial listed companies in Vietnam

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